A Minimum-Wage Hike Seems Inevitable, But the Debate Is in the Details

Perhaps Washington, D.C., may have some answers.

When local venture capitalist Nick Hanauer laid out his “capitalist’s case” for a $15 minimum wage just six months ago, he says he was hailed as “the devil” in certain circles, while a Forbes columnist called his thesis a “near-insane idea.”

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Oh, what a difference a few months can make.

Today—after SeaTac voters narrowly approved a $15-an-hour minimum-wage measure; after socialist Seattle City Council candidate Kshama Sawant rode to victory on a minimum-wage platform; after a wave of national fast-food worker strikes protesting abysmal pay—the call for a $15 minimum wage in Seattle has an air of inevitability.

All of Seattle City Council’s members have said they intend to make the issue a top priority, with Sawant saying she will move on a ballot initiative for November if they don’t act fast enough. While not announcing a detailed proposal, Sawant on Tuesday announced the launch of a website, 15.now.org, aimed at reaching workers themselves and building a grassroots movement. Mayor elect Ed Murray has scheduled a press conference for Thursday at which he will announce an “income inequality advisory committee.”

Unlike in SeaTac, where Proposition 1 sparked a fierce fight, the reaction from Seattle’s business community has so far been muted. Restaurateur and music promoter David Meinert, who has qualms about a blanket $15 mandate, explains that many find talking about their views “scary” for fear of being labeled “a bad person” in progressive Seattle. Witness the reaction of Kate Joncas, president and CEO of the Downtown Seattle Association, when called about the issue. She said her group hadn’t talked about it yet, and then abruptly hung up.

Yet a debate is quietly shaping up—centered not so much on whether a minimum-wage hike needs to happen, but on what the right number is, who should be affected, and how quickly it should be implemented. Those mulling over the issue are looking not just to SeaTac but to other cities offering different minimum-wage models, most notably Washington, D.C.

“There are important questions about what is the best way to do this,” allows David Rolf, president of SEIU Local 775, a lead organizer behind SeaTac’s Proposition 1. He acknowledges that a 61 percent minimum-wage hike (from the imminent 2014 state rate of $9.32 an hour) is a much more ambitious goal in Seattle than in SeaTac, due to our city’s vastly larger and more diverse economy.

The union leader says he is also prepared to accept some delay in the speed with which a wage hike takes place—“as long as we’re not talking about 10 years.”

City Council member Mike O’Brien brings up a bill that’s now on the table in Washington, D.C. Endorsed late last month by all of that city’s council members, it would raise the city’s minimum wage to $11.50 by the end of three years. A two- or three-year time frame “sounds reasonable,” O’Brien says.

That bill is actually the D.C. council’s second attempt at passing a minimum-wage bill. The first would have set a $12.50 minimum wage, but only for retailers earning more than $1 billion a year—the measure was aimed at big-box retailers like Walmart. When the retail giant threatened to cancel plans for new stores in the city, Mayor Vincent Gray vetoed the so-called Large Retailer Accountability Act.

Nevertheless, Meinert calls the act “very interesting” and suggests that Seattle might want to do something similar. “If you pass something that says companies making over a billion a year have to pay $15 an hour, nobody’s going to complain,” he says. It would be a completely different story, he adds, if you pass such a minimum-wage for “small day cares, small nonprofits, and other small businesses.” He points out that, contrary to what some believe, SeaTac’s measure does not enact an across-the-board wage hike either, but affects only businesses that revolve around the airport and that meet size and other criteria.

Similarly, O’Brien says he’s pondering an approach that would focus on specific industries—say, those dealing with fast food or hospitality.

City Council member Tim Burgess is intrigued by another aspect of what D.C. is doing. Council members there are coordinating with their counterparts in neighboring Prince George’s and Montgomery counties (Md.) so that they can raise the minimum wage together. Burgess says he plans to bring up the possibility of a regional approach uniting King, Pierce, Snohomish, and Kitsap counties. (Whether impatient minimum-wage activists will wait for that undoubtedly excruciating bureaucratic process is another matter.)

One of the thorniest questions in this debate is what to do about small businesses, whose viability would be most impacted by a big jump in payroll costs. One option would be to exempt them entirely. Remarkably, not all small businesses are calling for that.

“I want to be part of the solution,” says Joe Fugere, owner of Tutta Bella Neapolitan Pizzeria and a member of the mayor-elect’s advisory transition committee. Yet he says he’s still making up his mind about whether to support a minimum wage as high as $15, and in any case doesn’t think the answer to the “living wage” gap is “a single number.”

By way of example, he says that all his employees, including dishwashers, earn at least $13 an hour. But that income is derived by pooling and redistributing tips—something he maintains should be taken into account when setting a minimum wage.

Meinert, who is starting a 401K program at his restaurant, The 5 Spot, holds that retirement and health-insurance benefits should also be factored in.

Nor might a minimum-wage bill affect all employees equally. “We might want to treat a high-school student working a summer job differently from a 35-year-old mom with two children at home,” Hanauer muses.

Jim Spady, owner of Dick’s Drive-In, suggests a “training wage” aimed at teens or those entering the job market for the first time. (Current state minimum-wage rules already allow 14- and 15-year-olds to be paid less.)

Some of these ideas are sure to meet with pushback from $15-wage advocates. Rolf, for instance, expresses skepticism about a training wage, saying it could lead employers to lay off adults and hire teens in their place. The union president also seems disinclined to lower the $15 number or allow for exemptions. “We’re in favor of a $15 minimum wage—not a $15 wage just for some people,” he says.

While he may have to compromise, it’s worth noting that such a bill might also push some wages higher than $15—at a business like Dick’s, for instance, which prides itself on attracting the most capable staffers by offering pay and benefits above the norm. The iconic Seattle hamburger chain offers a starting wage of $10.25 an hour, which rises to $10.75 after three months. The company also provides a highly unusual health plan, whose premiums it pays entirely, without any employee contribution. On top of that, Dick’s encourages its workers to go to college by offering $22,000 toward their education.

Spady doesn’t support a $15-an-hour minimum wage. He argues that such a hike would prompt employers to become more selective, ultimately hurting those who need a starting job most. But if such a wage becomes the law of the land, he would not only comply. Rather, he says, “We would have to respond and pay more than the market.”

Flipping burgers for $16 an hour? It seems possible in Seattle’s new political climate.